A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

Big Daddy government just backed all the crooks this morning by lowering the discount window. The market immediately jumped back up. Looks like DOPES is right. The real fools are those who have been frugal and financially responsible. If you were irresponsible, took out loans you can't pay back, paid radical prices for your real estate, and laughed at everyone else like DOPES with greed dripping from your lips as you speak, and are an idolater, you win!

Bravo! The FED just slapped the renters in the face. Apparently the crash has been postponed after the market correction. You renting imbeciles just don't get it. It's the world economy stupid. Coldwell Banker laughs the sub-prime mess off. It will just add one more month of supply to work through. LMAO @ you moron renters in your 1BR shitholes!!!

Bravo! The FED just slapped the renters in the face. Apparently the crash has been postponed after the market correction. You renting imbeciles just don't get it. It's the world economy stupid. Coldwell Banker laughs the sub-prime mess off. It will just add one more month of supply to work through. LMAO @ you moron renters in your 1BR shitholes!!!

______

Do you really believe this, anon?

If so, you have a severe case of cognitive dissonance, and you will most likely die penniless.

A contrite Jeff Larson, founder of Boston hedge fund Sowood Capital Management, spoke to his clients for the first time yesterday and tried to explain how events of recent weeks iped out more than half of their $3 billion investment.

"You entrusted us with the management of your money, and we lost a lot of it, to say the least," Larson said. "No apology is sufficient."

He spoke on a conference call with investors for about 10 minutes but did not take questions.

Larson said Sowood was unwinding remaining positions and expected to return about $1.4 billion to investors, slightly less than the $1.5 billion estimated earlier. Sowood agreed this week to sell most of its debt securities, which had caused the fund's problems, to Citadel Investment Group of Chicago at a deep but undisclosed discount.

It has been an abrupt end for Sowood, launched three years ago by Larson when he left his job at Harvard Management Co.investing part of the world's largest university endowment. Harvard Management, which lost about $350 million in Sowood's demise, had been Larson's principal investor when he opened the hedge fund's doors.

State pension officials in Massachusetts say they lost about $30 million in their Sowood investment. The nonprofit Boston Foundation estimates it will recover only about $10 million from its $28.6 million direct investment in the hedge fund.

Sowood wrote to clients Monday explaining broadly how the fund's investment strategy had gone disastrously wrong in a matter of weeks. Larson yesterday described in greater detail events inside Sowood that pushed the firm's portfolio into a financial crisis.

He said Sowood borrowed heavily to make investments the firm believed were low risk and backed them up with a hedging strategy intended to act as insurance in case anything went wrong. But markets reacted much differently than Sowood expected, driving down the price of its securities and rendering its hedges ineffective.

Sowood tried to get out of trouble by selling some of the securities, but demand dried up and Sowood found few buyers for sinking assets purchased with mostly borrowed money. That led to a kind of financial death spiral. Finally, Larson said he spent last weekend negotiating a big deal to avert a complete financial disaster he feared could have occurred this week.

"We did this in order to avoid what we believed was the very real possibility of counterparties seizing our collateral and liquidating or auctioning our positions," Larson told investors yesterday. "In such an uncontrolled process, we believe there was a high likelihood that little to no net asset value would remain for our investors."

Mark my word -- the financial sh|tstorm is just getting started. Those who call it the tip of the iceberg are correct.

We will see some up days in the stock market on the way down, but all hell has broken loose and we will be headed down in a big way. If the powers that be could suppress the fact the Countrywide is teetering on the edge of bankruptcy and has had to tap their line of credit, they'd suppress it. If news of the massive central bank cash injections could have been suppressed, it would have been suppressed.

"The market is terrible," said Mitch Covington, president of the Building Industry Association of the San Joaquin Valley. "We have inventory, a little bit of traffic and can't convince [buyers] that it is a great time to buy."

maybe you're having trouble convincing them because um..actually, it isn't?

When it comes to cooling off the real estate market, Bernanke may prove to be an overachiever.

Credit quality used to be based on borrowers’ ability to repay on their debt. With collateral values in a freefall, a new element of risk has emerged—the “desire to repay”. Even people with strong financial wherewithal are handing over the keys to their mortgage company because it makes good financial sense to do so when they’re upside-down on LTV. Therefore key to staving the freefall in mortgage backed securities is to stabilize real estate values. Restored confidence in the collateral will be a crucial element to bringing WallStreet back to the mortgage backed securities trough. This will relieve over-tightening in mortgage lending, and in turn support demand for people that desire home ownership.

So long as swift, decisive monetary and executive U.S. policy action are taken to support real estate, the “bottom” of home values will be largely based on what people can afford. Inaction will result in downward spiral for real estate values, with far reaching repercussions that unhinge the very foundation of our economy.

Simply put, the U.S. is suffering from equity dysfunction, “E.D.” And, while the cure won’t be as simple as taking a little blue pill, there is hope.

BTW, did anyone really think the US economy could be sustainably driven by housing? We can't export our housing! Time to get our hands dirty again and start making products and offering services that the rest of the world will buy-- ask your parents how it was done. Old School made this country a powerhouse-- the youngsters closed up shop, took out the equity loan, and ran to Walmart and Target to spend, spend, spend on Chinese products that were so inexpensive the youngsters bought two of everything.

The solution is to gentrify the U.S. by replacing our gritty manufacturing plants with shiny new strip malls that sell products from another land. Oh wait, we already tried that and it didn't work! No worries, it's not your fault, right?! _________________ UR Better

be patient people. The fundamentals are still out of line, the bulk of the ARM reset is coming at the end of this year and all of 2008, easy credit days are a thing of the past, housing will still fall, foreclosures will still rise, and worst of all the consumer is going to stop spending.

The only thing the Fed is trying to accomplish is gliding us down to as soft as possible landing instead of us nose diving into the ground. Either way, the direction is undeniably down.

When it comes to cooling off the real estate market, Bernanke may prove to be an overachiever.

Credit quality used to be based on borrowers’ ability to repay on their debt. With collateral values in a freefall, a new element of risk has emerged—the “desire to repay”. Even people with strong financial wherewithal are handing over the keys to their mortgage company because it makes good financial sense to do so when they’re upside-down on LTV. Therefore key to staving the freefall in mortgage backed securities is to stabilize real estate values. Restored confidence in the collateral will be a crucial element to bringing WallStreet back to the mortgage backed securities trough. This will relieve over-tightening in mortgage lending, and in turn support demand for people that desire home ownership.

So long as swift, decisive monetary and executive U.S. policy action are taken to support real estate, the “bottom” of home values will be largely based on what people can afford. Inaction will result in downward spiral for real estate values, with far reaching repercussions that unhinge the very foundation of our economy.

Simply put, the U.S. is suffering from equity dysfunction, “E.D.” And, while the cure won’t be as simple as taking a little blue pill, there is hope.

BTW, did anyone really think the US economy could be sustainably driven by housing? We can't export our housing! Time to get our hands dirty again and start making products and offering services that the rest of the world will buy-- ask your parents how it was done. Old School made this country a powerhouse-- the youngsters closed up shop, took out the equity loan, and ran to Walmart and Target to spend, spend, spend on Chinese products that were so inexpensive the youngsters bought two of everything.

The solution is to gentrify the U.S. by replacing our gritty manufacturing plants with shiny new strip malls that sell products from another land. Oh wait, we already tried that and it didn't work! No worries, it's not your fault, right?!

Bail outs don't help consumers. As consumer spending continues to slow profits will drive the stock market, not interes rates. People are in debt up to their eyeballs. It has to stop. With banks tightening credit requirements, credit card minimum payments doubled and the housing ATM out of order we will all have to clean house and begin living within our means.

The media has done a very poor job of relaying the collapse in the jumbo mortgage market. The term jumbo mortgage loan refers to any loan that is higher than the maximum dollar amount established in Fannie Mae and Freddie Mac's guidelines. At this time, any loan for a single family property greater than $417,000 is considered a jumbo loan. The limits increase to $533,850 for two-unit properties, $645,300 for triplexes and $801,950 for 4-unit homes. There are also some areas of the Country where the limits are higher including Alaska and Hawaii. But, what does that mean for housing in high cost areas like CA, NY, FL, etc? The guidelines for doing a jumbo mortgage have tightened dramatically in the last few days. Lenders such as Indymac, Countrywide and WAMU have increased reserve requirements and stopped taking stated income for loans with less than 20% down. The interest rates for full doc jumbo loans in CA have risen by .50-.75% for the most prime credit worthy borrowers. A client making $200k gross income(everybody right?), with 1k monthly payments on the credit report for cars, putting 20% down qualified for an 825k purchase using standard debt to income ratios two weeks ago. You move rates to 7.75% and the client only qualifies for 777k. Jumbo mortgage rates are averaging 7.75% for this scenario for a 30Y fixed. Which everyone should have, it makes no sense to gamble with an adjustable if you are planning to live in the home more than a few years. As the guidelines continue to tighten, and the reality of the freeze in the jumbo market sets in you will see sellers drop their prices as we move toward the credit freeze of winter. Buyers can no longer go to their mortgage lender and get the rocket fuel financing that propelled the luxury market between 650k-1.5m. Above these loan sizes clients tend to have substantial active and passive income from stocks, bonds, and small businesses to manage almost any lending squeeze. Working class vs asset class. Don't worry about the rich, they always find a way to make it. Keep your head on and remember it's never different this time.

I'm just having such a spectacular day - a day that comes along about once every 5-10 years. Ok, so it's not a once-in-a-lifetime day. But it's damn close. And I just wanted to share that with my HP brethren. Happy Friday everyone !!!

This afternoon, while watching CNBS, Jane Wells showed Orangelo driving his car into CFC HQ and right when they showed a close up of him.....the bottom ticker was running the prices of commodities and Orange Juice came by....I guess this falls into the category "You Can't Make This Sh*t Up".

It was only ten days earlier that Fed chairman Bernanke declared the US economy sound and inflation still the primary concern. In ten days the credit crunch - in which lenders withdrew support from high-risk asset classes - became a liquidity crisis - in which lenders became so panicked they would not support even prime mortgage and commercial paper. The next potential step from the liquidity crisis is a solvency crisis, and that was not something the Fed was prepared to allow. The risk had now become a deflationary environment and an economic recession.

To date the Fed had attacked the problem (as had central banks around the globe) by treating it as a temporary loss of liquidity in the inter-bank system. It injected billions into the overnight money market in a move which it hoped would encourage banks to extend credit to non-bank institutions which were facing the inability to rollover financing on even their quality debt portfolios. While the Fed target cash rate has remained at 5.25%, the actual overnight market rate had fallen to as low as 4.5%. By not actually cutting the target rate, the Fed was maintaining a level of uncertainty. If these injections were intended only to be a band-aid, then there was no rush to take the risk on lending to non-bank institutions. The 90-day T-bill rate fell from 5% to as low as 3.3% as money flowed not to where it was needed, but to government-backed safety.

America's biggest non-bank home lender - Countrywide - can be seen as representative of the problem facing the US financial system. Countrywide is not weighed down with subprime mortgages. The majority of the lender's mortgages are of prime quality. Yet as liquidity dried up, Countrywide was forced to go cap in hand to banks to provide any sort of financing to save its mortgage portfolios. There was a very real risk Countrywide would go under.

The Fed's primary credit "discount window" facility, as described in the second paragraph of the statement above, is a means for the Fed to lend money directly to qualifying institutions as opposed to injecting liquidity into the inter-bank market and expecting the banks to do the rest. Since 2003, the term "discount window" has in fact been a misnomer. Before this time the Fed would lend money to banks in distress at a discount to (lower rate than) the Fed funds rate. The intent is logical - if you're in distress then you really need a cheap loan, not an expensive one. This is where the central bank becomes truly the "lender of the last resort". Lending cheaply to a distressed borrower is not sound commercial practice, but if it prevents thousands or millions of US citizens losing their life's savings or losing their houses then it is what an elected government is there to do.

However, while honourable in intent the discount window became self-defeating. If a bank were to go to the window it is, by implication, admitting a problem. The result is just as likely to be a further run on funds. The discount window was seen to have a "stigma" attached.

So in 2003 the Fed decided to go the other way, and turn the discount window into a "premium window" by definition, just not by name. Until Friday morning banks could go to the Fed and borrow funds at 100 basis points above the target cash rate - in this case 6.25%. This helped to alleviate some of the stigma, as if a bank were to go to the window it still indicated a problem of sorts, but not one so dire as to require a cheap-fund bailout.

On Friday, as the above statement notified, the Fed cut the discount window margin from 100 basis points to 50 basis points. Qualifying institutions could now borrow at 5.75%. It also pushed out the life of such rescue funding to 30 days. Perhaps most importantly, it relaxed its previous requirement for AAA government paper as collateral to include AAA home mortgages and "related assets".

Somehow the bulls see this as temporary and that credit spreads will go back to stupid levels with a rate cut.

The bulls do not see that this is a permanent adjustment to risk and that the previous level was unrealistic.

A Fed rate cut might embolden more speculation and pop stocks for a while. That is until the market realizes (perhaps immediately) that this is the same old "treating the drug addict with more drugs" prescription.

Liquidity is going down rapidly because Asia is repatriating capital now. Asia already realizes that the U.S. is incapable of handling this problem. Investors there are taking back whatever savings they have been willing to "lend" to the U.S. The Fed lowering rates would only exacerbate that.

You can see that a stronger yen against the dollar (Japan repatriating capital) is causing U.S. stock prices to go down. If the yen broke 105 a year back Japan would begin to suffer major losses against its foreign currency reserves and the pain would increase for them. At some point even central banks must act sensible.

But that 105 level is probably even higher now as this game has been played at higher and higher levels of dollar-yen. The pressures are greater now.

There is no way out of a credit crunch other than letting the market correct the imbalances I have spoken about.

The week's list of companies reporting corporate earnings is also short, with retailers in the majority.

Home improvement chain Lowe's Cos. Inc. (LOW.N: Quote, Profile, Research) releases results on Monday. Analysts expect a small increase from a year ago. The report will get special attention because of the company's involvement in housing, and also because rival Home Depot Inc. (HD.N: Quote, Profile, Research) recently reported a 15 percent drop in profit.

Outside of the retailing arena, reports are due from medical device maker Medtronic Inc. (MDT.N: Quote, Profile, Research) on Tuesday and food company H.J. Heinz Co. (HNZ.N: Quote, Profile, Research) on Friday. Heinz said on August 15 that its profit would exceed Wall Street's forecasts.

TOKYO (Reuters) - The Nikkei plunged more than 5 percent in its biggest one-day loss since the September 11 attacks on Friday as sharp gains in the yen triggered concern about Japan's economic outlook and companies' profits, hammering shares of exporters such as Toyota Motor Corp. (7203.T: Quote, Profile, Research).

The Nikkei is 16.5 percent below this year's peak logged in February. For the whole week, the benchmark tumbled 8.9 percent, the biggest drop in seven years.

A dive in commodity prices hit nonferrous metals stocks, trading firms and other energy-related stocks, pulling the broader TOPIX index down to its lowest in nearly 13 months.

The yen was being whipped around by speculators and investors grappling with massive market moves the previous day. By the stock market close it was around 112.50 yen, much stronger than Toyota's assumption of 115 yen to the dollar for the business year to next March.

The outlook for Japan's economy was also clouded.

"The latest GDP data showed exports were weak and Japanese corporations could not benefit from the cheap yen," said Daisuke Uno, a market strategist Sumitomo Mitsui Banking Corp.

"There's now a possibility that corporate profits and the Japanese economy, both having been said to remain firm, could falter."

The Nikkei slid 874.81 points or 5.42 percent to end at 15,273.68, the lowest since August 7, 2006. It also booked its biggest daily percentage loss since September 12, 2001, the first trading day after the attacks on New York and Washington.

The losses in carry trades have exacerbated by a few hundred pips after the flat Philly Fed reading and continual tumble in the Dow. Even the VIX index hit a 2003 high. Everyone is comparing today’s move to October 1998, when the Yen crosses fell from 1000 to 3000 pips over the course of a few trading days.

October 1998 is the closest comparison to the current financial crisis. That was the year thatRussia defaulted on its debt and Long Term Capital faced major losses. At the time, the Federal Reserve responded with multiple interest rate cuts.

Below a comparison of the most recent price action against the price action in October 1998. The moves over the past few days still pale in comparison to the moves that we saw nine years ago. Therefore now is not the time to increase risk. Big moves like today necessitate lower leverage.

Looks like August 21st should be quite active in the markets. Hold on to your hats.

Moody's warns on funds

DAVID PARKINSON

With files from Boyd Erman and Bloomberg News

August 17, 2007

Moody's Investors Service Inc. raised the spectre that the global credit crunch could become serious enough to trigger a major hedge fund collapse, on a day when many market signals suggested that many of those funds are liquidating assets to free up cash.

"A possible consequence of the repricing of risk assets would be the failure and disorderly liquidation of a hedge fund or other institution of sufficient size as to disrupt markets, as LTCM threatened to do in 1998," Moody's vice-chairman Chris Mahoney said during a conference call yesterday, referring to the collapse of U.S. hedge fund Long-Term Capital Management LP.

The global tightening of credit markets has already shaken the hedge fund industry, and their troubles have infected financial markets in general over the past week or so, amid news of serious troubles at hedge funds operated by big names Bear Stearns Cos., Goldman Sachs Group Inc. and BNP Paribas SA. Yesterday's market volatility had the stamp of hedge funds on it, as some of the key market segments in which those funds have been significant investors - such as commodity plays, small-capitalization resource stocks and emerging markets - saw some of the heaviest selling.

Evidence from major brokerage desks indicated that there wasn't an all-out rush to sell among hedge funds yesterday, and there was no sense that Canadian hedge funds were facing widespread margin calls. However, the funds were active sellers of a variety of assets - particularly U.S. funds, which are more heavily leveraged than their Canadian counterparts and are more desperate to free up cash.

Colin Stewart, portfolio manager at hedge fund manager JC Clark Ltd., noted that the high volume of trading in "large, liquid" Canadian stocks - such as BCE Inc. and Manulife Financial Corp. - is an indication that hedge funds were busy.

"That would have to be interpreted as institutional selling in some form," he said, adding that any funds that felt they needed money fast would probably be selling big-name stocks first because they are the ones with the biggest pool of potential buyers.

"When you want to raise cash, you go to the stuff that is most liquid," he said.

Robert McWhirter, president and portfolio manager at hedge fund firm Selective Asset Management Inc., said yesterday's wild markets may have reflected a growing urgency for hedge funds to raise cash before the end of the month, when they would have to pay out any redemptions sought by their investors. Because investors typically have to request redemptions some time before the end of the month, he said, people in the industry have been talking about Aug. 21 as "a line in the sand" - the time at which the funds would face the reality of redemption obligations.

When the Federal Reserve shows no discipline then speculators will be left with no fear. Without "Fear", "the path of less resistance" is "Greed".

Unwinding of yen carry have caused Hedge Funds to take a safety

Hedge funds have to raise cash to meet these withdrawal requests by liquidating their assets. Some of the triple digit losses in the Dow was the result of these margin call. Also, margin calls in general have taken a lot of traders out of the markets.

Flight to safety had benefit the US dollar up to Wednesday as traders were forced to close out their risky positions and move back to cash.

But once most of speculators are stopped out, that is typically when we have a bottom in periods of liquidation.

Yen Carry trade speculators are only taking a short term break until after BOJ next meeting, as long as BOJ provide the mechanism for excess global liquidity the root cause of problem has not gone away.

"Pricing of risk" shake out bad speculation, the Fed should had the discipline to stomach the pain to let the market self correct until BOJ next meeting.

The question now is will BOJ reluctance to raise interest rate coupled with today overcorrection by the Fed like that of 1998 lead to over speculation in the stock market which could lead to another stock market crash like the dotCom crash?

If the next market cycle becomes a great super market cycle like that of 1926 to 1928, how will the Federal Reserve handle a crash if it is left with no ammunition.

How many time do central bankers around the world have pump in good liquidity into the global market and risk run away inflation to bail out BOJ before they comprehend the severity of their bad excess global liquidity problem.

The point of no return for BOJ is next week.

Do all fiat currencies need be insolvent before BOJ raise interest rate?

A worsening credit crisis in the US which is slowly engulfing the global debt market will accelerate unwinding of yen carry trades and lift the Japanese currency to new highs, analysts said on Friday.

The yen surged to a high of 112.01 against the US dollar in New York trade on Thursday, a level not seen since June 2006, as investors rushed to unwind yen carry trades. Carry trades refer to the practice of raising funds from lower-yielding currencies like the yen to invest in higher-yielding ones such as the New Zealand dollar, Australian dollar and the euro.

The near zero interest rate in Japan in recent years had offered investors virtually free money to finance their leveraged investment, dragging the yen to as low as 124.12 versus the dollar on June 22 this year, its weakest since December 2002.

But as worries about tighter credit, triggered by the problems in the US subprime mortgage sector, spilled onto the global market and shook equity markets across the globe, investors are now rushing to unwind their positions and convert them back into the yen.

'Japanese individuals have started to dump their yen-carry positions in the past few days due to the lack of clarity about the final shape of the credit crisis,' said Minour Shioiri, currency analyst at Mitsubishi UFJ Securities.

Given the highly volatile global financial markets, the Bank of Japan is widely expected to leave interest rates unchanged at next week's policy meeting, said Ryohei Muramatsu, treasurer at Commerz Bank in Tokyo. The European Central Bank is also likely to do the same while the US Federal Reserve may order a rate cut, he said.

'If these actions are implemented, turbulence on the global equity market may settle down, thereby easing pressure on the dollar,' he said. But Muramatsu said that to fully reverse the course of global markets, the Fed may probably need to slash interest rates by 50 basis points to sharply boost liquidity.

Central banks around the world have been pumping funds into their banking systems to address a possible liquidity shortage but equity markets continued to slide, with investors unconvinced those actions can limit the ongoing fallout from the US subprime turmoil.

The sub-prime crisis has been as much a preoccupation for bloggers as for the mainstream media over recent months

HousingPANIC

A blog that bills itself as having "a serious attitiude problem", HousingPANIC also nails its political colours firmly to the mast in a recent post that looks ahead from today's sub-prime anxiety to the 2008 presidential election in the US, and asks who the American public will ultimately hold accountable.

"Rightly or wrongly, will Americans come to blame George Bush (the worst president ever) and the GOP for the housing crash?... Will the housing crash be the No 1 issue on voters' minds in 2008?"

The drawback to the "Greenspan put" is that it qualifies as what economists like to call a "moral hazard." It gives traders an unwarranted sense of security that encourages them to take unjustifiable risks with their money, because they know that the Fed will always bail them out.

But Greenspan is gone. Ben Bernanke is in the hot seat now. And this morning, the Fed surprised the market by announcing a cut in its discount rate. Not to be confused with the much more important federal funds rate, which governs the interest rate applied to overnight transfers of cash between banks, the discount rate refers to the rate at which the Fed will loan money directly to banks. Much of the commentary this morning suggests that the significance of the move is largely symbolic. Banks haven't been using the "discount window" very often.

But symbolism carries great weight in financial markets that are experiencing the kind of frantic volatility we have become accustomed to in the last few weeks. At Portfolio Magazine, Naked Capitalism's Yves Smith, filling in for the vacationing Felix Salmon, declares that Bernanke has shown his colors with the bold move -- the "Greenspan put" is alive and well. The stock market certainly enjoyed the news, shooting up instantaneously and keeping its gains all day long.

Facing some intense competition for long-held spot as the world's top automaker to Japan's Toyota, General Motors' top executive reiterated late Friday the yen is still undervalued on world's currency markets.

"I think, in the next five or ten years, the bias is for the dollar to weaken and all the basic economics suggest that it should," GM Chairman and chief Richard Wagoner told reporters during an impromptu press conference after the financial markets had closed in the United States.

American automakers have cranked up a major campaign focusing on the what they describe as the undervalued Japanese yen, Wagoner acknowledged.

From GM's perspective the yen at 114 is a lot better than the yen at 120, he added.

"That's good," said Wagoner, adding the yen's true value is somewhere in the range of 90 to 100 to the dollar.

"It would be a huge change in the competitiveness. I think my colleagues in Europe would agree as well," he said.

"It would dramatically level the competitive field if we saw the yen at 90 to 100 range," Wagoner said.

"I think a couple of things could happen. If they yen strengthens, I think the dollar and the euro might be more stable. I think it would make the Europeans feel a lot better if we saw some adjustments from the Asian currencies particularly the yen."

Wagoner also said it could halt the flow of manufacturing and auto jobs out of the United States.

"Bravo! The FED just slapped the renters in the face. Apparently the crash has been postponed after the market correction. You renting imbeciles just don't get it."

Give it some time, GOP sheeple. The current turmoil is just the start and the tip of the iceberg, like we HPers did forecast while many dumb people like you didn't believe either. It's all unfolding nicely and according to our warnings. Enjoy your short-lived and naive sense of optimism. And watch for that pink slip!

Can't you feel the tension in the air, trolls? I know you can...so thick that you can cut it with a knife.

BTW, Have I told you trolls that there's a devastating earthquake (literally) that will hit a major city in California until the end of 2007, which will turn the economy even crappier? Just wait and watch...and remember us when it happens. Remember, you saw it here first!

The FEDS may have saved the Crooks temporarily; but, there are unforseen things that can cause the markets to tank, such as a Natural Disaster or Terrorist Attack. It is the Unforseen that is the scarriest unknown to this already brittle econonmy.

The Plunge Protection Team is not omnipotent, the Fed is neither omniscient nor omnipotent. Many will lose vast "wealth" due to the monumental foolishness of creating trillions out of thin air and then lending it to people who will never be able to pay it back.

The Governor of the Reserve Bank of Australia appeared to attack his counterparts at the Bank of Japan (BoJ) yesterday for unwittingly encouraging massive speculative positions through the global yen carry trade.

Glenn Stevens’s comments came at the end of a week of unprecedented currency volatility that saw every major exchange rate wrenched around in what one senior Deutsche Bank broker called an “international bar brawl with no cops in sight”.

At the centre of the melée has been the yen - the currency believed by some to be at the core of a massive, long-term mispricing of risk by hedge funds. The investment strategy known as the yen carry trade may have been the basis of nearly a decade of cheap financing for speculative investments.

As that trade was unwound, the yen surged to its biggest weekly gain against the US dollar in almost nine years. It has also made large gains against the Australian and New Zealand dollars this week. The Reserve Bank of Australia intervened to prop up its dollar for the first time in six years yesterday, reducing losses versus the yen over the past two weeks to about 20 per cent.

Behind the unquantifiable yen carry borrowing frenzy has been the controversial decision by the Bank of Japan nearly a decade ago to cut its interest rates to nearly zero and keep them there as the Japanese economy clawed its way out of slump.

In his half-yearly testimony to the Australian Parliament, Mr Stevens described Japan’s interest rates, which are still only at 0.5 per cent, as “fundamentally a distortion”. To restore some stability to global financial markets, he said, Japan’s interest rates must be returned to “normal”.

Mr Stevens’s comments confirm the suspicions of many investors that the yen carry trade, though virtually impossible to quantify or track, has been distorting a wide range of markets. Equities, crude oil, copper, soft commodities, fine art, property and vintage wine are all thought to be priced by miniature bubbles that have been partly inflated by borrowed yen.

Jim Wood Smith, a Williams de Broë strategist, said: “The easiest way to make money has been to borrow cheaply in Japan”.

As well as yesterday’s extraordinary 5.2 per cent collapse in the Nikkei 225 stock index, the Japanese currency blasted higher against the US dollar, sterling and euro in the morning, Tokyo time, then hurled down in the evening when London and New York trading began.

Much of the yen pandemonium centres on the general flight from equities: hedge funds and other “multi-strategy” investors are liquidating profitable assets to meet margin calls or redemption demands.

Chris Wood, a CLSA strategist, said credit was “now in the process of self-destruction as the whole edifice of structured finance is completely discredited”.

So shorting mortgage companies has worked out pretty well for making some money off of this bust. It's getting pretty late in the game to make any more similar moves though. Anyone have ideas how to make money out of the next steps of the collapse? I'm thinking REO service/maintenance/auction companies are going to do well for the next couple of years, going long on them seems like a good move. Found a listing of lots of little REO service/maintenance companies with a quick search, but wasn't able to locate any big publicly-traded companies of this variety. Anyone got suggestions of REO service companies or suggestions about other moves that could make money as the unraveling continues? Betting some money on this unwinding has made it that much more fun to watch, and frankly I've never made a move that's panned out as well as shorting CFC and IMB.

With so much money coming from yen carry trade, speculators have to max out their leverage to achieve higher and higher gains.

No one believe that yen carry trade fueling of speculative asset growth could bring Credit Worthiness to it knees but for the last several weeks as we all watched the spread on the SWAP market widen, taking down companies like Countrywide we all but wonder how.

Then one day like last Wednesday these currency speculators get that unwanted phone call.

But many of these speculators did not wait until the last day, and sold their stock positions to pay off their margin call. This in turn drove stock prices lower causing more unwinding of yen carry trade positions. In turn SWAP widen more, and rating companies like Moody and S&P have no other choice but to give more downgrade to companies like Countrywide.

As the yen unwind it drove the Dollar up, and as Margin Call Wednesday past Dollar sharply came down the same way it went up.

Would this vicious cycle continue without the Federal Reverse bail out of Countrywide?

Could the Federal Reserve waited until the BOJ meeting?

http://www.buffalonews.com/145/story/142969.html

Many investors are getting margin calls from brokers

When stocks declines, brokers who lent money to stock buyers are asking for theirs back

They are dreaded words on Wall Street, and they’re becoming more common: margin call.

More money invested in the stock market is borrowed from brokers than ever before, and some investment houses are asking for theirs back through what are known as margin calls. It’s one of the reasons why Wall Street sold off so sharply in recent days.

“It’s being referred to as the biggest global margin call in history,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. A flood of margin calls is typical in a market correction, he said, and “it can turn small declines into large declines. That’s why leverage is dangerous.”

When a stock dips below a certain point, brokers who lent investors money through margin agreements demand that the investors sell part of the stock or pony up cash to cover losses. When that happens, investors often have to liquidate other assets, which can magnify stock market drops. It’s also partly why the sell-off in equities is hurting other markets, like metals and energy.

Margin debt on the New York Stock Exchange was at a record $378 billion as of June, up 36 percent from the previous peak in 2000 of $278 billion, according to Schaeffer’s data. Margin debt on the Nasdaq Stock Market is also at a record $30 billion, up 33 percent from the 2000 level of $20 billion.

The NYSE’s level of margin debt has surged 37 percent just this year — the biggest six-month increase since April 2000. This means about 1.94 percent of the money traded on the NYSE is borrowed money. Percentage-wise, however, there was more margin debt in February 2000, when a record 2.4 percent of the NYSE’s total market capitalization was margin debt.

With less than 2 percent of the NYSE’s $19.5 trillion market cap in margin agreements, it may not seem like margin calls could cripple the market. But Johnson noted that the numbers don’t account for hedge funds who borrow money from banks and aren’t NYSE member firms.

Furthermore, there’s margin debt in other markets, like bonds, and other factors at play — investors taking their yen out of dollar-denominated assets, for example.

Most investors who buy on margin are large institutional investors, especially hedge funds, but Johnson noted that there are some aggressive individual investors who do so, too.

Buying stocks on margin is riskier than using one’s own cash. People do it, though, because when the stock rises, the gains are huge — they essentially make money on money they never had in the first place.

``A possible consequence of the repricing of risk assets would be the failure and disorderly liquidation of a hedge fund or other institution of sufficient size as to disrupt markets, as LTCM threatened to do in 1998,'' Mahoney said.

Moody's, criticized by policy makers and investors for failing to cut ratings on bonds backed by subprime mortgages until July when some securities had already lost more than 50 cents on the dollar, is drawing analogies between today's credit crunch and the collapse that triggered the last bailout organized by the Federal Reserve.

Moody's Corp. shares fell 1.7 percent today after French President Nicolas Sarkozy and Europe's financial regulator called for a probe into ratings firms. The stock has dropped 34 percent this year as the credit rout threatened the most lucrative part of its business.

`Height of Chutzpah'

``I'm certain there is at least one major hedge fund out there at least as rightly concerned about a collapse in Moody's as the other way around,'' said Colin Negrych, a principal at Barclay Investments Inc., a broker-dealer in New York.

``To see Moody's make forward-looking negative statements about hedge funds, who may well be suffering in large part as a result of their reliance on Moody's now evidently worthless ratings, is to witness the height of chutzpah.''

ADVERTISEMENTThe cash management company, which managed about $1.6 billion of assets, said its board decided it was in "the best interests of the corporation, its creditors and other interested parties that a voluntary petition be filed ... in an effort to restructure the indebtedness of the corporation," according to a filing in the bankruptcy court for the Northern District of Illinois.

Sentinel told clients in an August 13 letter: "we are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients."

The Northbrook, Illinois-based firm said then that "we don't believe it is in anyone's best interest if a run on Sentinel took place and we were in a forced liquidation mode."

The bankruptcy filing said Sentinel estimated assets and liabilities both exceeded $100 million, but it wasn't more specific. It said it estimated it had at least 200 creditors.

It said it signed a letter on August 15 engaging the law firm of Goldberg Kohn Bell Black Rosenbloom and Moritz Ltd. to help with the bankruptcy petition.

There is not going to be a housing crash. Very few people realize how much power NAR has in Congress. Where do you think all of the realtor dues go? Why, the pockets of any Congressman running for re-election, of course. Do you think NAR is going to let a housing crash occur? Do you seriously think there will be a hosuing crash in the middle of an election year? If we do have a crash, it will not be until January 21, 2009.

HPers,Does the State of California go on suspension ,and firing binges to hide the number of pink slips it would need to hand out?How about other states?California budget is late again. I know that it can be a common practice in the corporate world to axe,and suspend workers when times get rough to avoid any number of responsibilities-UEI-Retirements,law suits,scheduled raise in wages, etc.

"The problem with subprime, the yen carry trade and credit crunch is getting all mixed up now. It [investor sentiment] is not very rational," Hong Kong Monetary Authority chief Joseph Yam Chi-kwong told reporters in Beijing.

He said the value of the yen shooting up from 118 to 114 on Thursday against the US dollar was a direct result of the wave of the yen carry trade.

The yen continued rising on Friday, reaching a high of 112 to the greenback at one point before easing to hover around the 113 mark.

Yam said it is difficult to calculate market losses in the meantime, since investors' positions in yen holdings remain unclear.

But the possibility that other markets will experience selling pressure when investors try to make up for the losses is very real, sending shock waves across global markets, he noted.

How many think that even though theFed jumped into help, it's just tobig a mess for that to be sustainableas a solution? Another hedge fund, a large bank, something will be thestraw that will break even the Fedand FDIC.

The unprecedented mortgage meltdown is hammering hundreds of thousands of homeowners nationwide who are trying to buy homes or refinance loans - at both the low end and the high end of the housing market.

The subprime market helped fuel record foreclosures in the Denver area. In recent months, defaults on subprime loans have spread to other previously hot markets, such as California, Arizona and Florida, increasing their foreclosure rates as well.

Many market observers, especially in Denver, where foreclosures have been raging for the past six years, had been warning that it was inevitable the lax underwriting standards, easy credit and creative financing deals, such as 100 percent loans, interest-only loans, and option ARMs, would lead to a correction, if not a collapse.

For many, it was not a question of if it would happen but when and with what severity.

Home sales and building are down in metropolitan Phoenix, but there are other indicators to track where the housing market is headed.

Here's a look at some.

• Home listings in the Valley climbed to almost 55,000 during the past few weeks. That's a new high. The number of houses that are marketed for a short sale to avoid foreclosure or are bank-owned is also up. That's good news for buyers looking for deals.

• About 85 percent of the Valley homes foreclosed on in July went back to the lender, according to the Information Market. That means fewer investors bidding on foreclosure properties on the courthouse steps. In many cases, more is owed on the home than what it's worth now.

• Nationally, there are 500,000 to 700,000 new homes built but not sold, according to real-estate consulting firm Robert Charles Lesser & Co. Metro Phoenix's share ranges from 10,000 to 20,000, depending on who's counting.

There is not going to be a housing crash. Very few people realize how much power NAR has in Congress. Where do you think all of the realtor dues go? Why, the pockets of any Congressman running for re-election, of course. Do you think NAR is going to let a housing crash occur? Do you seriously think there will be a hosuing crash in the middle of an election year? If we do have a crash, it will not be until January 21, 2009.

_______

HahahahahahahaHAAAAAAAAAaaaaaaaaaaa!!!!!!!!

What planet are YOU living on???

There already IS a full-blown housing crash, WELL underway. If the NAR were as powerful as you say, the events of the last two weeks in the biggest mortgage banks and hedge funds and on Wall Street would not have taken place!

Once again, someone (homeowner) buys into this mindset that the government is omnipotent and can actually stop the dreadful horror that is occurring because TRILLIONS OF DOLLARS were "created" out of thin air, then lent to people who will never be able to pay it back!!!

We have had a lot of feedback from readers about our first article about the Zillow.com website which was published here during the week of February 12. Nearly all of the writers were extremely negative about Zillow. For example:

"This website is highly inaccurate. The values of the homes are not even close. A house valued at 380K will come back on Zillow as 212K. They have a serious database problem."

"It's a very BASIC GUESS. It cannot 'see' the house (if the house is) damaged by a storm or fire or anything else. It cannot 'see' (if) the property is waterfront or has a spectacular view - or not - and compares (it) to only what's close in proximity - or the property that is gutted on the inside. Hey, it is free so everyone can use it at their own risk. VERY misleading in many areas and only decent for 'cookie cutter' neighborhoods in disclosure states. You can trust it about as much as a pie in the sky."

"Fun with Zillow. Change the year your house was built. For some reason if your house was built in 2000 instead of say, 1956, it is worth a couple of hundred K less. At least mine was. Add a bedroom. 25k less. Two houses. Next door. Same sq footage, yard and house, 200k difference. Suffice to say, needs work. And in the short term will cost some poor sod who has to sell his house and has a bad zestimate a lot of money."

The bottom line seemed to be that readers felt we were much to kind to this new and highly hyped website.

Well you didn't give us a chance to finish.

We tried to give Zillow a lot of leeway as it is a Beta site and is obviously evolving by the day. But there are definitely problems, the most obvious of which is that there is limited data available for much of the country or Zillow utilizes information which seems to bear a poor relationship to actual market value. At a later date, after giving Zillow a little more time to get its act together, we will look at metropolitan areas where Zillow itself rates its performance well and compare its "Zestimates" and home descriptions to listing prices and other information available on real estate websites and newspaper open house ads.

But, even as a Beta site and given that we didn't have a lot of contacts in areas where Zillow gave itself multiple stars for data accuracy and availability, we did find some strange bits of information and data that was certainly not static.

For example, Salt Lake City, Utah showed some very unusual numbers when first checked two weeks ago. A 13 room house in one of the city's better neighborhood was sold by a relative in 1994 for around $320,000. She then bought a luxury condo in a high rise for $260,000. Salt Lake is not Las Vegas. Home values have accelerated lately, but have been flat for many years. When we first checked out the house and the condo last week they had a Zestimate of well over $1.5 million and $1.2 million respectively. Unfortunately we did not print out the information but called someone else who knew the area and who confirmed what we had seen. This person also checked on a nice three bedroom slab ranch she had once owned slightly south of the city and was speechless to see it Zestimated at over $3.7 million.

A week later we rechecked all three of these properties and found that - whoops - there was no Zestimate on any of them and that the assessed values of these homes were a much more realistic at $280,000, $320,000 and $297,000. When we checked again today, all but the slab ranch had completely disappeared from the database.

The most innacurate information on Zillow came from a close suburb of Washington, DC in northern Virginia. There a friend reported that her house and the house directly across the street were both Zestimated at $471,000. My friend's house is a charming four bedroom, 2 bath early 20th Century craftsman style home in pristine condition. The kitchen was remodeled and a family room added some 20+ years ago and both kitchen and family room have all of the bells and whistles. The neighbor's home was gutted and nearly doubled in size at least four years ago. My friend's home is assessed at $692,000 and recent neighborhood sales ranged from $750,000 to $950,000. The house across the street has been valued by realtors at $1.2 million. The Zillow Zestimates bears no relationship to any of the real numbers she provided yet Zillow gives itself four stars for its accuracy in Northern Virginia, states that its data quantity - i.e. the availability of data elements - at "most" and ranks its Zestimates as coming within 10 percent of the actual selling price 70 percent of the time. This was substantially higher than the three stars, "most" and 66% ratings it gives itself in the Boston/New Hampshire/ Connecticut area which we found to be much more accurate.

It is a shame that Zillow came on line before it was ready for prime time. The hype has been incredible - ABC's Good Morning America featured it this week and, as we stated at the beginning, CNN, CNET, Motley Fool, USA Today, Business Week, and dozens of metro newspapers have given it a lot of free air or ink. Many people have visited the site, came away disappointed and may not bother to go back. Better that Zillow had all of their ducks in a row before going public.

Amidst all the commentary and sorting out of market Strang und Durm these days, some financial world figures stand head and shoulders above the rest for their wisdom, level-headednessness and believability.

One in particular is Jeremy Grantham, called by some the philosopher king of Wall Street even though he's based to the northeast in Boston.

Investors borrow funds in countries with low interest rates such as Japan to fund purchases of higher-yielding assets abroad, a practice referred to as the carry trade. Volatility in the market increases the risk of those bets and has been a primary reason for investors to pay back their yen loans, boosting the currency's value.

After Asian markets closed Friday, the Fed lowered the interest rate it charges banks and acknowledged for the first time that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling global financial markets two months ago.

"There is not going to be a housing crash. Very few people realize how much power NAR has in Congress. Where do you think all of the realtor dues go? Why, the pockets of any Congressman running for re-election, of course. Do you think NAR is going to let a housing crash occur? Do you seriously think there will be a hosuing crash in the middle of an election year? "

Congress cannot control the economy regardless of what the NAR wants, you stupid troll!

Fannie Mae, the mortgage finance giant, yesterday predicted that housing prices will decline by 2 percent on average this year and by 4 percent next year as mortgage delinquencies rise, lenders tighten borrowing standards and the volume of unsold homes approaches record levels.

Adding to the trouble, Dallavecchia said, is that many borrowers with adjustable-rate mortgages are facing rising monthly payments, which could drive them into foreclosure. "This could have a cascading effect in the market," he said.

I love these non thinkers who insist that the Real Estate market has "bottomed out" and that we will now see prices begin to go back up. We now have a double problem. Before, it was only high prices that stopped people from buying, now they can't get the liar loans that they needed to get the overpriced housing in the first place. There is a limit to how much a house can be worth. The limit is the salary of the people and their ability to pay. This has NOT gone up, in fact we are seeing lay-offs and people will be losing those expensive homes. How do you believe they will carry on? The government will bail them out? No they won't. You will be forced to sell and because of the glut (not included are the houses now off the record because they are vacant, as high as 20% of all homes) sell lower and lower and lower. Marlton New Jersey.-Woman tries to sell her home to move to Florida. No takers, lowers it by 25K, no takers, Lowers it another 10K, no takers, Lowers at another 5K (now losing money)-someone buys it with "incentives" such as buyer assist thrown in. Yea! Right! Prices going up! What a laugh!

Call me crazy, but there is NO HOUSING CRASH here in the New York City metropolitan area. Here are some observations that I have made:

1. Home prices are up 1.7%

2. Sales volume is up in New Jersey towns with easy train or ferry access to Manhattan

3. Developers have cancelled or reduced most buyer incentives

4. Condo flippers are still very active. Some are breaking even, but very few, if any, are taking losses.

5. Older homes are still being torn down and replaced with McMansions. The slowdown in construction is barely noticeable.

6. Ultra high end properties here in Bergen County (where I live) are taking longer to sell. Russell Simmons house (listed at $23 million) and Eddie Murphy's house (listed for $20 million) have each been on the market for over 1 year.

7. Starter homes are selling quite quickly, sometimes for full asking price or even over asking price.

Did any of you read the Ben Stein article on CNN.com? He is downplaying the entire mortgage collapse and giving some pretty good numbers to support that (not that I see his view).

He states that in the past 3 weeks the market has lost over $1 trillion which is equivalent or more than the amount we would lose when the mortgages all reset. I think $1 trillion is the number being passed around so he may be right. If we've already lost $1 trillion in wealth, and so far it doesn't seem like a big blow to the economy, why will mortgages resetting taking out another $1 trillion be a devastating blow in contrast?

I just spoke with a someone at CFC. They are loaded with bad mortgages. I am told that to expect a collapse first of "extra" houses. That is those houses that were mountain or vacation retreats. The corruption in those parts were immense. Expect homes that are now 175K to be down below 100K within months. In mountain retreat places, Brokers would have a place appraised at a super high price and then sell them for even more. I saw an example in Lake Ariel PA. A mobile home, very nice, but still a mobile home, was appraised at 99,600. A really crazy figure. They were asking 119,900. I was suspicious immediately about the assessed price (because I had never seen a mobil home given such a big value before) and indeed the CFC person told me that Lake Ariel and Lake Harmony homes are way out on assessments to allow unscrupulous dealers to get maximum gains in a sale. Also developments like Pocono Downs were building for $400K. The construction has stopped with no takers with 50 yet to build. So, anyone who thinks that this is over is sadly mistaken. The worst is yet to come and we all know the condition of CFC

Although you may hold a mortgage for 30 years, the mortgage lenders typically sell your mortgage to investors. This is accomplished through the asset-backed commercial paper market.

Two ways mortgages are package include instruments known as collateralized debt obligations, or CDOs, and collateralized mortgage obligations, or CMOs.Many CDOs and CMOs include some percentage of subprime loans.

Suffice it to say that many investors in these instruments didn’t know exactly what they were buying. Before subprime blew up, they never asked. Now they’re asking and no answers are forthcoming. Ipso facto: Investment has halted, causing the current liquidity crisis.

The Internet bubble serves as a good analogy. Investors in “smoke and mirrors” Internet companies never asked whether the companies were viable. They were too busy making money. It was only after the implosion that questions were asked. Same situation here.Worldwide central banks initially attempted to calm fears by injecting liquidity. That’s the correct response, except as pseudo government agencies they rarely get anything right. In this case the infusion of liquidity didn’t get to those that needed it: mortgage lenders. It’s the equivalent of sending aid to Brazil to help the earthquake victims in Peru.

On Friday, the Fed made an effort to correct that problem by cutting the “discount window rate.” This differs from the Fed’s fund rate in that the “discount window” is used by institutional borrows as an emergency source of capital.

Following the Fed’s move, the markets staged a strong rally. Now the hope is for a Fed funds rate cut. The Fed is contemplating doing just that, but it’s far from a certainty.

Remember, cheap money caused the problem but it’s not necessarily the cure. It allowed the housing market to reach bubble status and enticed investors to increase leverage.

Three things need to happen:

1.) The housing market needs to normalize.

2.) The credit markets need to return to some semblance of sanity with respect to risk.

3.) The equities markets need to reduce the level of leverage.

Reducing the level of leverage in the equities markets brings us to the yen carry trade.

The yen carry trade is the mother of all leverage. With the Bank of Japan lending money at absurdly low rates, investors have gleefully borrowed it to bolster their portfolios.

It is the investment equivalent of taking candy from baby as long as the yen behaves by not appreciating in value. As the yen strengthens, the effective cost of Japanese money escalates and at some point the baby wants its candy back.

I am new to this blog and this is my first post. We are likely on the eve of a huge equity market downturn and it is important to position one's stock portfolio accordingly. I think the following is going to happen and would love feedback about this hypothesis:(1) We experienced the biggest real estate bubble in US history. The bubble has burst 18 months ago and we are starting to see the effects on the equity markets (right now it is the equivalent to the Nasdaq in October 2000).(2) As always the fed will start to lower the federal fund rate to save the markets and attempt to inflate the deflating bubble.(3) If the rate is lowered sufficiently folks with ARM mortgages might get some relief once their rates resets (meaning their monthly payment might not go up significantly).(4) Lower fed rates also mean that inflation will increase and the dollar will tank further. Since long bond rates are sensitive to inflation, the long rates will go up. Long bond rates are linked to the fixed mortgage rates resulting in these rates going up as well. It will therefore not make sense to refinance an ARM into a fixed rate mortgage (at least not in the short term). Regardless, the real estate and mortgage sector is screwed. (5) As inflation picks up we will get higher commodity prices, especially ingold prices.

Based upon the above my investment strategy for the next couple of years is the following:(1) Short real estate stocks until they fall to roughly 2002 levels.(2) Then buy commodities, especially gold.(3) Wait until the fed is brave enough to raise interest rates to bring inflation under control, sell gold and buy stocks.

It looks like New York City is officially immune to the market slump. There are 2 great articles in this weekend's real estate section of the NY Times about this. Then there is an article in the NY Post about how there MIGHT (notice the article talks in the future tense, not present tense) be a slowdown in the $5 million + range in Manhattan. I don't buy this article. Last year, the media started writing all sorts of things about the NYC market crashing and it bounced right back up after only cooling down for 3 months.

Sure some markets, like Miami, have crashed. But real estate is regional. There is no national housing market. Prices have declined in the double digits in Miami while prices have appreciated by double digits in Manhattan.

It sure is lots of fun reading bubble blogs while my rental property in Brooklyn appreciates 10% a year and costs me nothing in carrying costs... I am a little worried about the value of my home in NJ, but not my Brooklyn house. It will be even more fun when I get the 15% property tax cut from the state government! It's nice when the system is jigged to benefit homeowners over renters.

GLOBAL markets rallied over the weekend and the local bourse should bounce today. But be warned: the crisis in the US economy isn't over by a long shot.

Despite efforts to unlock it, much of the US credit system remains seized. The credit market shut down last week and there are millions of US consumers who rely on it.

They are used to easy credit, which has been one of the driving forces of the US economy for years. The US consumer accounts for about 70 per cent of the nation's GDP. Two weeks ago, Americans could buy a house with no down payment. Now they'll need a minimum 20 per cent deposit before a bank will even take their call.

Signals of the crisis abound. An executive who runs a mortgage business in southern California, one of the areas suffering the most from the burst housing bubble, told The Australian on condition of anonymity: "I think I'll take the rest of the year off until this thing sorts out. It's full-on panic mode here, with mortgage companies closing every day."

Little wonder that house prices in the US are falling at rates not seen since the Great Depression.

It's time once again to check in on Silicon Valley's real estate market - which, actually, has turned into two markets.

In super-pricey communities such as Palo Alto, Los Altos and Mountain View, housing sales are doing just fine, thank you very much. (After all, those Googlers have to live somewhere. And when you're busy changing the world, the closer you are to the Googleplex, the better.)

In more, shall we say, working-class communities, sales are plummeting. As prices throughout the valley climbed over the past few years, those of us without tech stock options pretty much needed, shall we say, creative financing to qualify for a mortgage.

The trouble is, with the growing subprime-mortgage mess, those creative loans are suddenly impossible to find. With fewer buyers able to enter the market, inventories are building. In fact, at the current sales pace, it would take more than a year to sell all the homes listed in parts of San Jose.

South Korea’s credit risk measured by the premium on credit default swap (CDS) which is a credit derivative via a bilateral contract under which two counterparties agree to isolate and separately trade the credit risk of third party entity, was revealed to be lower than those of other emerging markets such as Russia, Mexico and Malaysia.

According to a recent survey of countries’ CDS premiums, specifically those traded for hedging risks related to five-year government bond transactions, South Korea’s credit risk rose by 92.9 percent from 16.8bp (1bp=0.01 percent) on June 29 before the U.S. subprime mortgage woes hit the global financial market to 32.5bp on August 16 when a slump in the domestic stock market was reported.

Considering that the higher the government bond’s credit risk, the higher the CDS premium, the country’s credit risk has soared in one month and a half.

China was the only one with a lower CDS premium, therefore, a lower credit risk country than Korea among emerging markets. The CDS premium on Chinese government bonds posted 26.2bp on August 16.

However, regarding the CDS premium increase rate over the past month and a half, South Korean market scored the lowest figure among emerging markets, meaning that South Korea was least affected by the U.S. subprime mortgage crisis as to the CDS market.

So what effect does the Fed reaction to this calamity have? They have simply made it easier for the big banks to borrow money. In other words, the most effected will continue to flounder, I suppose, until they are soaked up by the big banks. I don't see these stormy days ging away anytime soon.

I read Ben Stein's article. I think he is a bright guy but he appears to not understand what is going on here.

The major problem here i believe is the debt markets. When so many people are foreclosed on people start losing a lot of money in the markets (alread happening). When this happens their is a reassesment of risk that occurs once people start to understand that they too could lose money.

This affects anything that is related to debt. For example there were a lot of leveraged buyouts that have completely stopped recently. These are funded by debt and are attractive when rates are low. Rates for debt are dramatically increasing because people are finally starting to realize the amount of risk out there.

It's just the mother of all credit bubbles, and the housing market is one symptom of it.

I don't think Ben is only seeing things in isolation here, he has his blinders on and is not realizing the effect that all of these defaults have on other things going on in the economy.

This is an economy that is driven bu debt and the availability of the debt is disappearing.

Have you ever experienced a cell phone running out of power just at the critical time when you need it? Would you not love a cell phone that runs 6 months straight without needing recharge? Or a laptop computer that works a month at a time?

You will LOVE it! The technology is finally here! They spent billions of dollars on this thing for years and it's finally ready for mass marketing later this year. It's called DMFC, Direct Methane Fuel Cell.

Fuel cells, like DMFC, MUST utilize precious metals palladium and platinum. Supply of PGM is very limited. The whole world produces only 7 million ounces of palladium per year, and consumes more even without fuel cell. There will be a huge shortage, driving the price of PGM metals, especially palladium, to the stratosphere!!!!

That brings a huge opportunity buying the SWC stock, near 52 week low now. SWC is the one of the only few PGM metal producers in the world, the ONLY one in the USA. The stock is cheap because it has NOT been making money yet. But with huge demand of PGM kicking in as DMFC goes to mass market soon, you bet you can make money in SWC beyond your wildest dream!!!

SWC has a price/sales ratio as low as 1.2. What kind of P/E will it have if PGM metal price just increase 4 or 5 times? Click on my name to read more on my blog.

I have a coworker with a large (1M+) portfolio at etrade. On Thursday morning, his margin was frozen for an unknown reason. He says he does not use margin, but he was quite worried that a company like etrade would do this.

I transferred about $25K from etrade to another bank on Monday of last week, and on Friday evening I received a noticed that the transaction failed. My account has sufficient funds, and the 'quick transfer' has never failed on me nor has it taken a week...

I have read message board posts on stock market blogs of similar incidents happening to other etraders over the past week. Over the weekend, etrade sent out a letter to its customers saying 'everything is ok'. And, of course, now I am very worried... Has there been any blog posts or news on this?

Etrade letter to customers:

The last few days have been unlike any that the market has seen in many years. And if you have been watching the financial news, you are undoubtedly hearing rumors circulating about many financial services companies, including E*TRADE FINANCIAL.

I'm here to separate fact from fiction and provide you with reliable — and accountable — information about the strength of E*TRADE's business. I want to assure you that your accounts and your assets are safe with us, and that we put the utmost value on our relationship with you.

* E*TRADE is a financially healthy organization. We have disclosed in great detail our limited exposure to credit risk in sub-prime mortgages — less than one fifth of one percent of E*TRADE's overall mortgage portfolio. The vast majority of financial analysts who monitor our business applauded our proactive efforts to add transparency, and are indicating that market concerns about our portfolio are exaggerated. * E*TRADE has ample liquidity to manage its way through the current credit environment. For our customers, this means we are well capitalized, have strong cash flow, high cash reserves and significant excess borrowing capacity. In addition, E*TRADE Securities customers are protected by SIPC coverage, while E*TRADE Bank customers benefit from FDIC coverage, with up to three times the amount of FDIC coverage for sweep deposit accounts. * E*TRADE's business fundamentals are firmly on track. The second quarter ended June 30, 2007 was one of the best quarters in the company's history in terms of revenue, new trading/investing account activity, net new customers and deposit growth. Our July metrics show continued strength and record customer engagement. * E*TRADE continues to adhere to our strict discipline with respect to risk mitigation. For as long as we've run the balance sheet, we've focused on prime and super-prime loans. Our approach is conservative, as reflected in the fact that 97% of the first mortgages we hold have high FICO scores and combined loan-to-value ratios below 80%.

Currently, volatility in the mortgage industry is impacting the entire financial services industry. The E*TRADE franchise is strong and growing, producing new and innovative products and services to best serve you. We will continue to work diligently to prove to you every day that we are deserving of your business.

Thank you for your continued patronage.Jarrett LilienJarrett LilienPresident, COO and Director, E*TRADE FINANCIAL

The 71-year-old Fukui, now in the final months of his term, remains determined to secure his legacy of ``normalizing'' monetary policy by raising the lowest borrowing costs in the industrialized world.

``If Fukui can't raise rates from 0.5 percent by March, he would probably feel that he didn't do what he set out to do,'' says Masaaki Kanno, a former central-bank official who is now chief economist at JPMorgan Securities Japan Co.

Resuming rate increases in the world's second-largest economy would put Fukui at odds with the International Monetary Fund as well as with the government of Prime Minister Shinzo Abe. They cite Japan's renewed struggle with deflation -- including five months of falling prices -- as reason to keep the bank's target rate on hold.

Greater Concern

Of greater concern to Fukui, whose five-year term ends in March, is the danger that leaving borrowing costs abnormally low will fuel risky investments leading to asset bubbles, while depriving his successor of maneuvering room in case Japan's economy stalls.

The same global market turmoil that has taken an August increase off the table -- at the end of last week, Credit Suisse Group calculations based on interest payments showed a zero probability -- reinforces Fukui's point that Japan's abnormally low rates encourage unsafe investment.

``He is concerned that, if they stay so low for long, there will be the risk of resource misallocation,'' Kanno says.

The credit crunch that triggered a global sell-off of stocks this month also drove the yen to its highest level in more than a year as the market turmoil prompted investors to sell risky investments funded by so-called carry trades -- investments funded by low-interest loans in Japan.

``We were caught off guard,'' said Terri Becks, president and chief operating officer of Towson, Maryland-based Campbell. ``When these anomalies in the market happen, in this case how highly correlated moves in many markets were, you are either on the right side or the wrong side. This time we were definitely on the wrong side'' in currencies, interest rates and equities.

Campbell's biggest fund, with $9 billion in assets, lost 10.8 percent in July, the most since 1990. John W. Henry's $122 million Financial and Metals Portfolio fell 11.7 percent in July, its worst month since March.

Rising currency volatility is bad for investors in the carry trade because it increases the risk that gains from interest-rate differentials will be erased by foreign-exchange losses.

In the carry trade, investors borrow in countries with low interest rates, like Japan, and invest the proceeds in the currencies of countries such as Australia, New Zealand and South Africa with high rates. They profit on the difference. Overnight lending rates in Japan average 0.5 percent, compared with 6.5 percent in Australia and 8.25 percent in New Zealand.

Right now we are witnessing a credit crunch in the global markets. Central Banks will continue to intervene and eventually the big players on Wall Street will find something else to slowly inflate and all will be seemingly well for a short time.

We forget however, the little guy -the 95% of the US population. As ARMs reset, regardless of loan type (prime, Alt-A and subprime - they are all the same), and loan product availability diminishes, the foreclosure mess will continue to gain steam. Many jobs will be affected - everything housing related, which basically affects just about everyone else.

Meanwhile, companies will be forced to slash costs and the current global outsourcing trend will increase. I have seen people lose good paying white collar jobs to India - this has barely started and will only get worse. Wages will suffer.

70% of our GDP is individual consumption. Some say 40% of that consumption was paid by home equity extraction or just the wealth effect of feeling house rich. Add to that a dimishing wage due to outsourcing and increased unemployment in the housing sector.

Where will this lead us? The middle class US consumer - 20% of Global GDP, is being squezed.

Think about it...

We haven't seen anything yet. This has barely just begun - what we are witnessing is barely the tip of the iceberg. This will take years to play out.

In the near future, large investors will breathe a sigh of relief as the fed babies the banks.

But what will they do when the US middle class collapses?

The Corp executives and Wall Street Players that currently run things can learn from the humble farmer:

To make a living, the farmer shears the sheep and milks the cows. He does very well doing this.

However, at the end of the day, he makes sure that the cows and sheep are well fed so he can continue being in business.

I dont think our government and corporate leaders are aware of this. Or maybe the system is just so broken, that they can't do anything.

For the rest of us, the stock market is cheap on a price-earnings basis, profits are fabulous, Mrs. Clinton and Mr. Giuliani are far from being socialists and in the long run, both here and abroad, stocks are a lovely place to be."

Ben Stein is dead wrong on housing, but he does have a great point on the S&P 500 -- it's P/E is around 16. Even when housing craters into hell, as is inevitable, where do you think S&P P/E ratios will bottom out? Below 10? Hard to see that happening, even in a recession.

That's why I haven't bailed out of the equities markets, even if I have cut back and restructured towards foreign/export markets.

Did any of you read the Ben Stein article on CNN.com? He is downplaying the entire mortgage collapse and giving some pretty good numbers to support that (not that I see his view).

He states that in the past 3 weeks the market has lost over $1 trillion which is equivalent or more than the amount we would lose when the mortgages all reset. I think $1 trillion is the number being passed around so he may be right. If we've already lost $1 trillion in wealth, and so far it doesn't seem like a big blow to the economy, why will mortgages resetting taking out another $1 trillion be a devastating blow in contrast? "

Very valid points. Except the problem is, it dosent really take psychology into it. So maybe 3-4 trillion in losses inst too big a drop in the bucket, but how many peple will liquidate their 401k and investements if they see much over a 10% correction, even if 15% reealy sint that crushing a blow. PLus, all those people who see theres a problem ,and cut back on spending, dont buy a house, etc, etc, its a snowball effect. And i dont think its stoppable. Look at it this way, the fed acted to cut rates friday(scam), and it bought us a whole 250 points. Thats it.

Star Ledger Sunday paper. House in Livingston NJ is on the shelf for about $1.4 million. However, you can rent it for $7,500 per month! Personally, I'm holding out for the rent to get to $9,000 per month before I pick up the phone. I also hope they are asking for first and last months security. I have that ready to go too.

The amount of unsold homes in America is growing - June’s rate of existing home sales it would take nearly 9 months to sell all the houses on the market, the worst in 15 years.

A trade deficit—in 2006, the U.S. exported $1.47 trillion goods and services and imported $2.23 trillion.

Major U.S oil companies are being forced out of Venezuela, made to share revenues in Russia, and finding access to oil in Africa increasingly difficult.

Oil at $80 a barrel.

A risky $87 trillion derivatives market, increasingly disconnected from the real American economy.

A shaky stock market, with a Dow moving up and down in daily swings of over 200 points.

U.S. corporations facing greater investment barriers abroad.

A national debt that has increased by $3.3 trillion since President Bush took office.

*******

The head of the U.S. Government Accountability Office, David Walker warned that a “fiscal hurricane” was on the horizon for America in an interview he gave USA Today posted in November 2005.

USA Today concluded, “To hear Walker, the nation’s top auditor, tell it, the United States can be likened to Rome before the fall of the empire.”

In the March 4, 2007 60 Minutes episode he stated, “I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own failed Bush, Cheney, Rove and their blind supporters.”

to Homeowner: No one said anything about rich people in the Hamptons or Aspen. I am speaking about disaster areas like the Pocono mountains in Pennsylvania. Pocono Downs, Pocono Country Place, many places up there are suffering from maladies that range from gangs to bad & corrupt management leading NY people to pay high prices for stuff not worth 75K. Prices have sunk under 100K for many properties and those that were underway for 400K have stopped construction. Other areas, Tobyhanna, Greentown, etc. have not been able to sustain high pricing and these vacation homes are coming down in price, dramatically.

Those of you pinning your hopes on Washington preventing the housing and credit crash, abandon all hope now.

Connecticut Senator Chris Dodd, for example, has certainly been talked to by REIC people. He is trying to get the gummint to absorb all of these toxic mortgages. He is relatively powerful as Washington politicians go (Chairman of the Senate Banking Committee), but he can't fix this no matter what he does.

1) You no longer need to use your turn signals.2) You are no longer responsible for the credit decisions you make.3) The Fed is no longer worried about inflation....be it foodstuff or housing. Paul Volcker, please come home.4) Jim Cramer is now a financial guru, when, in truth, he should be breaking large rocks into small rocks.5) Deficits don't matter.6) The dollar doesn't matter.

I would like to know where is the best place to find data on delinquent mortgages in the 30,60, and 90 day interval. It would be great if I could obtain by county, but will take states if that is all I can get.

I never "respond" to what when I am challenged? Childish posts that insult my intelligence? I like how all of you guys are taking financial advice from a comedian; Ben Stein. Tell me what sotcks Stephen Colbert and Jon Stewart think we should all run out and buy...

And for the poster who wanted foreclosure data, there is a company called RealtyTrac that tracks throughout the country.

And I am sorry that I have made successful investments. Sorry that I sold a 2 bedroom apartment in lower Manhattan for a $400,000 profit. Sorry that I own a rental property in Brooklyn. Sorry that I own a McMansion in New Jersey.

Anonymous said... Did any of you read the Ben Stein article on CNN.com? He is downplaying the entire mortgage collapse and giving some pretty good numbers to support that (not that I see his view).

He states that in the past 3 weeks the market has lost over $1 trillion which is equivalent or more than the amount we would lose when the mortgages all reset. I think $1 trillion is the number being passed around so he may be right. If we've already lost $1 trillion in wealth, and so far it doesn't seem like a big blow to the economy, why will mortgages resetting taking out another $1 trillion be a devastating blow in contrast?

August 19, 2007 5:35 PM

---------------------------------

I agree with that and have been saying that all along. Home prices will fall, economy will be dinged a little bit.

GDP of the US is $13T a year. $1T in mortgages resets may seem like a lot of money, but it's not. Say 25% of the resets will foreclose, the value of all that will be 1.9% of GDP. Say 50% foreclose, 4% of GDP.

Not exactly the end of the world folks. And the foreclosure rate today is 5%. Probably won't go anywhere north of 10%.

Look at it this way. Suppose you make $130K a year and next year you lose $2500 or even $5000 due to a bad investment. Yeah it will suck and you'll be upset, but holy shit you're not gooing to be on the streets and starving because of it.

Never be sorry for being capable. I hang here a lot and what I notice is; 'I'll buy up houses for dimes on the dollar.' That just makes the writer a flipper. They all want to be flippers. They think because they didn't buy at the top and lose because of flipping, that somehow they'll buy at the bottom and win because of flippings to come. They are disgruntled 'not yet' flippers, almost all of them on this blog are. "Rental doesn't meet outgo! It will or I won't buy! And then I'll buy a lot of houses because I'll have the cash!" THAT'S A FLIPPER TO BE. Stand back, take in the big picture, Many of the goofs here want to be a flipper by buying lots of houses at what they will perceive as the bottom of the market. Unless they have lots of extended family to cover, that makes them worse than flippers. They will be preying on the misfortune. Yesterdays flippers preyed on the stupidity. To those that have some clever retort; you wrote it, I just interpreted it. If you're waiting to buy multiple homes you're a piece of crap just like those you complain of. Please spend some time reviewing my spelling and grammar. It'll prove you have nothing to add to the arguement.

Aug. 20 (Bloomberg) -- Capital One Financial Corp. shut its GreenPoint Mortgage unit today, saying that weak demand from investors who buy residential home loans made it too hard to turn a profit. About 1,900 jobs will be lost.

The shutdown will trigger charges of about $860 million, or $2.15 per share, mostly during this year, Capital One said in a statement today, and the bank cut its 2007 earnings forecast to $5 a share from $7.15. Capital One, based in McLean, Virginia, bought GreenPoint's parent, North Fork Bancorp, less than a year ago for $13.2 billion.

``The market disruption is too great to continue with GreenPoint's originate-and-sell business model,'' Capital One Chief Executive Officer Richard Fairbank told workers in a memo. He said he had hoped GreenPoint would be ``a growth platform,'' adding, ``I made the decision to wind down the business with a heavy heart.''

Capital One fell $2.03, or 3 percent, to $66.72 as of 4:18 p.m. in New York Stock Exchange composite trading, bringing the loss to 13 percent so far this year. In extended trading, the stock fell to $65.40.

GreenPoint focused on ``Alt-A mortgages,'' an alternative for people with good credit records whose needs don't fit the standards for prime mortgages. The so-called wholesale unit provided loans through mortgage brokers.

The shutdown affects GreenPoint's California headquarters along with 31 locations across 19 states, Capital One said.

GreenPoint will continue to service residential mortgages from offices in Columbus, Georgia, and is looking for buyers for its commercial mortgage origination business, Fairbank said. The bank will retain a $12.5 billion mortgage portfolio and will still make loans through its branches, the statement said.

To contact the reporter on this story: Rick Green in New York at rgreen18@bloomberg.net .

GDP of the US is $13T a year. $1T in mortgages resets may seem like a lot of money, but it's not. Say 25% of the resets will foreclose, the value of all that will be 1.9% of GDP. Say 50% foreclose, 4% of GDP.

Not exactly the end of the world folks. And the foreclosure rate today is 5%. Probably won't go anywhere north of 10%.

_______

Oh, really? Maybe you haven't really thought this through. Try THIS on for size:

Jim Willie CB of the Hat Trick Letter figures that the total cost of the subprime/collateralized debt obligation fiasco is an initial figure of $2 to 3 trillion in bond losses from CDO plus MBS bonds at a minimum. Match that with $4 to 6 trillion in home equity losses at least. Included in my estimate is the collateral damage of another $1 trillion in losses to high grade mortgage bonds and corporate bonds.

Oh, really? Maybe you haven't really thought this through. Try THIS on for size:

Jim Willie CB of the Hat Trick Letter figures that the total cost of the subprime/collateralized debt obligation fiasco is an initial figure of $2 to 3 trillion in bond losses from CDO plus MBS bonds at a minimum. Match that with $4 to 6 trillion in home equity losses at least. Included in my estimate is the collateral damage of another $1 trillion in losses to high grade mortgage bonds and corporate bonds.

This totals to about 80% of GDP.

August 20, 2007 11:32 PM

------------$2 to $3T and $4 to $6T....OK why not $200 gagillion? you can have a rational discussion or you can have a discussion quoting crazy people.

btw you are double counting. the same $1 lost in a bond is lost in home equity.

Well put turdly. I categorize the typical HPer like that as well. They bitch and whine about greedy flippers/investors yet yearn to make a killing themselves off real estate investments

Homeowner,

If you notice from being here a while, HPers are predominantly IT people. You know the nerd farm in the basement of your office building....that's who posts here regularly. Real successes in life, right?

I wouldn't get too worked up over anything they spew. Enjoy this blog for what it is...a view into a netherworld of unimaginable paranoia and extremism. But really, take nothing they say seriously.

It's still red-hot on the Hudson County waterfront, where a high-roller has purchased two condos on the top two floors of a Jersey City development at a whopping price tag of just more than $6 million. It's believed to be the highest price paid for a condo in the city's history.

Even if sold separately, either likely would have fetched more than $2.3 million, the previous record for a condo sold in Jersey City.

The unnamed buyer reportedly plans to merge them into a lavish two-story penthouse at the top of the 49-story building. Once completed, the two-story penthouse will measure 4,188 square feet. That translates to roughly $1,400 a square foot.

The purchase was made at K. Hovnanian's 77 Hudson St. development. The developer announced the sale last week but refused to divulge any details about the buyer - only about the development itself.

Gershon Adjaye, a broker who deals with high-end real estate in Hudson County for Keller-Williams, said the price per square foot is on the high end in the county - but it's still a steal compared to prices in the New York City market.

"The truth is the square foot price is still much less expensive than penthouse condos in New York, which don't offer the same views," said Adjaye, who is not associated with the sale.

Calm down man, HP'ers are nice people. We are glad that you and the Trump wannabe from Brooklyn "hang around here a lot", because you two may learn a thing or two.

Oh, and one more thing, we just buy or keep real estate when the CAP RATE makes sense...we are not stupid flippers who calculate returns like the sheeple on "Flip That House". Like my professor of Finance in Business School used to say many years ago: "Two plus Two is not 4 in finance.

The suit was filed in the U.S. District Court for the Central District of California on behalf of purchasers of Countrywide common stock during the period between Jan. 31, 2006 and Aug. 9, 2007, the firm said in a statement. (Reporting by Nichola Groom)

If you notice from being here a while, HPers are predominantly IT people. You know the nerd farm in the basement of your office building....that's who posts here regularly. Real successes in life, right?

You mean the people who typically have IQs of 130+ and yearly incomes of 100K+? No, those people are not successes in life, you idiot.

I can guarantee you that people here will be buying up properties dirt cheap. Why not? All the greedy little flippers ruined the possibility of just buying/owning a HOME for people like us. Damn right, if I'm in a position to buy a HOME for myself, and a couple more properties to give myself some passive income...I'll do it. The difference is, buying extra properties won't be based on speculation that "housing always goes up" so that they can be flipped for a profit. The buying will be based on the P/E...dumbass.

If you notice from being here a while, HPers are predominantly IT people. You know the nerd farm in the basement of your office building....that's who posts here regularly. Real successes in life, right?

You mean the people who typically have IQs of 130+ and yearly incomes of 100K+? No, those people are not successes in life, you idiot.

And no -- I don't work in a basement, you il-informed twit.

August 21, 2007 11:28 AM ===============================

BWA HA HA HA

130 IQ? Oh dear lord you are a deluded nerdling. Have you ever called IT support? If those douches have an IQ of 80 I'd be shocked.

As for you code monkeys out there, give me a break. Wow you write Java or .NET!! OOoooohh, Ahhhhh. Anyone can do it. That's why all your jobs are slowly but surely being sent to India and China and Romania where the same code can be written for 1/5 the cost.

I guess the upseide is you'll have a lot more time for your black helicopter/tinfoil hat clubs.

Oh as for $100K incomes...check BLS stats. In S.F. or N.Y. yes **some** code monkeys make $100K. Average is more like $60K.

Median annual earnings of computer programmers were $62,890 in May 2004. The middle 50 percent earned between $47,580 and $81,280 a year. Median annual earnings in the industries employing the largest numbers of computer programmers in May 2004 are shown below:

I asked for 30, 60, 90 day deliquency information. By county but I will take state. Realty Trac does not provide this information or at least I did not see it. If someone actually has a source for me it is very much appreciated.

German banks in a pickle - sauerkraut all round. They used strict standards in their domestic market, but went lunatic once they left their own border.

And there's $205 billion in MBS stuff still to be accounted for from the rest of Europe and the Middle East:

http://tinyurl.com/2yurtt

"Aug. 21 (Bloomberg) -- Landesbank Sachsen Girozentrale, the German state-owned bank getting emergency funding, has about 3 billion euros ($4 billion) in investments linked to U.S. subprime mortgages, according to a person with knowledge of the matter...

WestLB AG's new Chief Executive Officer Alexander Stuhlmann, who replaced Thomas Fischer in July after the bank suffered 243 million euros in first-half trading losses, told reporters yesterday the lender ``won't be the next SachsenLB or IKB because it has high liquidity and minimal subprime exposure.'' The Dusseldorf-based bank said Aug. 11 it had 1.25 billion euros in securities linked to the U.S. subprime market...

Investor confidence in Germany, Europe's largest economy, fell more than economists forecast to an eight-month low in August. The ZEW Center for European Economic Research in Mannheim today said its index of investor and analyst expectations dropped to minus 6.9 from 10.4 in July...

... Conduits in Europe, the Middle East and Africa had more than $500 billion of debt and owned as much as $205 billion of collateralized-debt obligations and home loans at the end of May, according to Moody's."

“If you notice from being here a while, HPers are predominantly IT people.”------------------------If you paid more attention, you would notice HPers have quite a variety of professional backgrounds, which run the gamut from service jobs to engineers to business owners. You can’t paint all HPers with one broad brush.

But on the other hand, it is perfectly alright here to brand all realtors as liars, all mortgage brokers as pond scum, all renters as either geniuses or fools, and all home buyers as idiots.

In addition to all the entertaining commentary here, that’s what makes HP so fun!-Mammoth

If you notice from being here a while, HPers are predominantly IT people. You know the nerd farm in the basement of your office building....that's who posts here regularly. Real successes in life, right?

Not to feed a troll but in general IT people proceed trends by a few years. They're not the ones to make it cool because there aren't enough of them but they're the ones to discover it.

So they're on to this bubble thing. In a year it will be feit accompli.

@rcochranhey dude if being dumb would hurt you'd scream all day long. Your drivel makes me want to chuck it up. Morons like yourself should be banned from posting comments on any type of blog. Be careful with that ammo…one of your bullets might ricochet and hit you in “da head”. Oh well, it's about time that you remove your defective genes from the pool and get yourself a Darwin Award. Head for the hills LMAO!

You mean the people who typically have IQs of 130+ and yearly incomes of 100K+? No, those people are not successes in life, you idiot.

______

Yes, those of us in software engineering and the computer sciences are quite well off, thank you very very much.

The "nerd" image applies to maybe 80% of the population, but you also have career software people who have summitted Everest, are ironman or powerlifting competition champions, speaking multiple languages, play multiple instruments, have lucrative finance-related businesses on the side...

We are some of the most successful people among you, by any standards.

I wouldn't get too worked up over anything they spew. Enjoy this blog for what it is...a view into a netherworld of unimaginable paranoia and extremism. But really, take nothing they say seriously.

Now back to the regularly scheduled programing....

____

What regularly scheduled programming? Fox News? Heh!

Paranoia and extremism? Yeah, there's some of that here...on the part of realtwhores and failed flippers who are getting burned by exactly what has been predicted on this blog...a severe housing bust and a credit crunch of epic proportions.

Go ahead, take none of this seriously. Keep on telling yourself the Fed will ride in on a white horse and save the stock and housing markets. Your delusional mindset will get you precisely what you deserve: poverty.

These blogs are quite amusing. The people that didn't get in on the upswing are doomers, the people that work for the man are on the opposite view. Here's a little true story for both.Back in 1987 I bpought my 1 bedroom apartment in the heart of the West Village in Manhattan for the insider price of $38,000. People in the building started to flip their apts. The unit next door went for $96,000 2 years later. By 1991 some sucker bought the smallest apartment in the building for $160,000. In 1992 real estate went belly up everywhere including my building which by then you couldn't give away an apt. there. Enter The RTC(remember that, S&L collapse?) 19 of 44 units in the building were up for auction, starting bids were $2500, most were sold for about $12,500 although some of the occupied ones sold for less. It took more then one auction to sell them. Throughout the next 3-5 years selling my apt. for $60,000 was a struggle. I don't have an MBA or degree in any kind of economics except street economics. In 2000 I talked to a well respected banker friend about the rise in prices of real estate as my apt was now worth $300,000. He assured me that we will never see anything like the RTC again. I told I didn't agree and that something in my gut tells me the finance world is out of whack and if this continues I believe we will see an incredible disaster economically. He reassured me that we could never have another Great Depression as that's what he thought I was thinking of. It's seven years later and the apartment is worth $500,000. Let me explain that the aprtment in my opinion is hardly worth the original money i paid for it. 400 square feet, you can hear people talking on the phone in apts above, below and on the sides. On weekends the noise from the NYU students and their puking in the streets is not what one would call quality of life in my opinion, lucky for me I own a house 50 miles north of nyc as well(peace and quiet). Wallstreeters and bankers have replaced the artists that once dominated the area, which in my opinion is another reason for 'there goes the neighborhood.' They walk down the streets dragging their butts home from work briefcase in hand without a smile to be found. I've lived in the Village for 27 years now and I'm thinking of seling. The phone rings a week ago it's my banking friend, he sounds panicked, we talk small talk. He brings up the conversation we had a long time ago, he says I think you were right. I say about what? The Depression. I tell him I wasn't thinking depression but something much more severe. What makes you think that he asks. Graphs, I say and the balance sheet. People owe to much money and they do not have savings. The prices of homes have increased way to fast and not in a realistic fashion at least in my opinion. He begins to spit out technical terms of why and how it happened. I reply, I have no debt, don't carry a balance on my credit cards ever and I pay my utilities and taxes on time. He says I'm the only one he knows who is like that. I say that's why I believe the way I do. Be prepared for something big ladies and gentlemen. Just as people were told The Titanic is unsinkable so the word 'cannot' can defy.Good luck to you all and God Bless

I spent the week wreckdiving in a place far from my home. Someone on boat asked what subprime really meant. They TRULY thought that it meant 'below prime' as in 'the interest rate on the loan is less than prime rate'.

After explaining to them they had it just about as backwards as it can get and that subprime is a product and not a person, and that it goes across the income spectrum, they summed up with;'so SUBPRIME MEANS "OUT OF BUDGET"'

That's the most eloquent assesment I've ever heard of the situation.

There's 'silence of the lambs', 'from the mouth of babes', and now 'eloquence of the imbeciles'

As far as nerds go, and please remember I didn't say nerdfarm in the basement that was someone else; I've always wished I had the time to devote to nerdism. You've got to respect the narrowness of their endevour. Focused, insightfull, ready to give up normalcy for a cause/profession. Nerds have truly inherited the earth through little more than paying attention and aspiring in a specific direction.

I do imagine that many of the people here reply to comments between sessions of Magic The Gathering or whatever drives you to fail.I do imagine that some of us use this blog as research for future trials, an anon place to read what people really think and a place to have your values bent/changed through a successfull rant. I've modified many of my opinions based on this and other blogs. I've been able to write things I dare not say to those I know, and have others analyze, digest, and throw it back up in my lap on occasion. Some of you really really suck and I'm so glad that you live far far away in mommies basement. Some of you do notsuck so much, and many do not suck at all. Soem are rightfully vicious, some are just retarded pitbulls. Even a retarded pitbull can sway opinion. But it's the perpetual barkbarkbarkbarkbarkbark that makes you poison the retarded dog next door. Get a new riff on occasion. We'll all think more of you.

p.s. If you're anon I have to assume you're too unimaginative to type in a descriptive name. Or your server prohibits it. I can't think of anything in between....

my my you nerdlings have some thin skin. you bad mouth every profession out there all day long, yet someone dares say something negative regarding the pocket protector set and ruffled feathers are everywhere.

These blogs are quite amusing. The people that didn't get in on the upswing are doomers, the people that work for the man are on the opposite view...

___

Interesting perspective.

I personally profited from purchasing a Phoenix home in 1993 and selling it in 2005, never hoping or wanting to use real estate as an investment, though the winds of fate did make real estate the single best investment of my life.

I rented until Feb 07, then bought a home from a builder under an "incentive" program, knowing FULL WELL my new property could depreciate significantly, even well below the discounted price. I have NO DESIRE to make a fortune flipping homes. I have found another way to make good money, and will stick to that as long as the game's rules are what they are.

I'm distressed to see many coworkers and other acquaintances in deep doo-doo with their house situations. I like these people but I can't really help them. We all make our own beds and we have to sleep in them.

The "Wallstreeters and bankers" are PEOPLE just trying to make it like the rest of us. Reality is hitting home for them harder than for most of us right now...they're at ground zero of this hideous mess...a mess that is at times going to seem to be getting better, only to be followed by further pain, until it's clear to all that things are very very very bad.

People like Larry Kudlow are calling for MORE liquidity and MORE interest rate easing, never acknowledging the fact that this is just going to make things ultimately worse.

I posted on Kudlow's blog that the Fed should RAISE rates now to get to the point of greatest pain sooner rather than later, and of course I was vilified for saying that.

This is all so interesting. My husband has been anti-debt, ESPECIALLY since everyone and their brother starting thinking they were real estate investors.By the time everyone started talking about real estate investing, the party was already over. When our neighbors all starting talking about interest only mortgages and how smart they were, we put our house on the market, seriously downsized, and started putting money away.Our "friends"and old neighbors all thought we were in financial trouble or something. It was embarassing, especially since everyone kept trying to get us to "just pick out a house and let us buy it and rent it to you". But my husband would quietly shake his head and roll his eyes once we got home and kept our finances really simple with no debt and lots of savings. The most insulting part of this was that the most pushy couples were making $10.50 an hour. We live so far below our means that most people don't realize he makes well over 100K. It was very hard not to just bust out laughing. How were they expecting to be able to be our landlords and why on earth would we want to pay anyone else' 100% financing plus little more? I mean, foundations and roofs are expensive! And don't give me that crap about how new houses don't have any of those problems. Most were built by the cheapest day labor possible.I don't know if the big crash predicted by some on here will happen, but here's what I do know: the boomers are starting to retire this year. It peaks around 2010-2012. Most of that generation knows nothing but how to finance everything and they haven't saved enough. I would like to know what others on this blog think of the fair tax proposal, which I think would solve a LOT of problems.

I don't know why it's so hard for people to believe someone in an IT profession could be earning $100k a year in the U.S. I earn over $100k, and I work in small-town America (city with less 200,000 population). I'm no code monkey, but I'm not in a management position either. I gross over $100k per year. My job can't be outsourced for a variety of reasons. I've held IT jobs in the past that are the kind that have been/still are outsourced to offshore firms. The IT people I've worked with over the years tend to be the 130+ IQ type, not the kind you disparage.

This is about the most sense I've read yet on this blog, and this man is dead on right.

House debters ... listen to this home owner (who has no debt).He knows what he is talking about through his own *experience*.

~~~

Anonymous said... These blogs are quite amusing. The people that didn't get in on the upswing are doomers, the people that work for the man are on the opposite view. Here's a little true story for both.Back in 1987 I bpought my 1 bedroom apartment in the heart of the West Village in Manhattan for the insider price of $38,000. People in the building started to flip their apts. The unit next door went for $96,000 2 years later. By 1991 some sucker bought the smallest apartment in the building for $160,000. In 1992 real estate went belly up everywhere including my building which by then you couldn't give away an apt. there. Enter The RTC(remember that, S&L collapse?) 19 of 44 units in the building were up for auction, starting bids were $2500, most were sold for about $12,500 although some of the occupied ones sold for less. It took more then one auction to sell them. Throughout the next 3-5 years selling my apt. for $60,000 was a struggle. I don't have an MBA or degree in any kind of economics except street economics. In 2000 I talked to a well respected banker friend about the rise in prices of real estate as my apt was now worth $300,000. He assured me that we will never see anything like the RTC again. I told I didn't agree and that something in my gut tells me the finance world is out of whack and if this continues I believe we will see an incredible disaster economically. He reassured me that we could never have another Great Depression as that's what he thought I was thinking of. It's seven years later and the apartment is worth $500,000. Let me explain that the aprtment in my opinion is hardly worth the original money i paid for it. 400 square feet, you can hear people talking on the phone in apts above, below and on the sides. On weekends the noise from the NYU students and their puking in the streets is not what one would call quality of life in my opinion, lucky for me I own a house 50 miles north of nyc as well(peace and quiet). Wallstreeters and bankers have replaced the artists that once dominated the area, which in my opinion is another reason for 'there goes the neighborhood.' They walk down the streets dragging their butts home from work briefcase in hand without a smile to be found. I've lived in the Village for 27 years now and I'm thinking of seling.The phone rings a week ago it's my banking friend, he sounds panicked, we talk small talk. He brings up the conversation we had a long time ago, he says I think you were right. I say about what? The Depression. I tell him I wasn't thinking depression but something much more severe. What makes you think that he asks. Graphs, I say and the balance sheet. People owe to much money and they do not have savings. The prices of homes have increased way to fast and not in a realistic fashion at least in my opinion. He begins to spit out technical terms of why and how it happened. I reply, I have no debt, don't carry a balance on my credit cards ever and I pay my utilities and taxes on time. He says I'm the only one he knows who is like that. I say that's why I believe the way I do. Be prepared for something big ladies and gentlemen. Just as people were told The Titanic is unsinkable so the word 'cannot' can defy.Good luck to you all and God Bless

I was a director in IT for a publicly traded company up until 8 months ago. When I left I had 18 employees reporting to me. Of those 18, the highest salary was $95K, a manager with about 10 years experience.

I'm not saying nobody makes $100K in IT, it just hasn't been all that common in my experience, at least not for salaried, non-mgmt employees.

Contractors of course are whole different story. Which is why I quit and now make almost twice as much charging by the hour.

As for IQ, yeah I suppose as a group most are pretty sharp. But the nerd stereotype is more often than not true, disturbingly so sometimes.

You may not believe it but there is another way of looking at your situtation. Instead of thinking that you are so right and the other people are wrong, okay they may not be right in the way they are trying to help you and they may be making some wrong assumptions, but the point you appear to be missing is that they offered to help you. Did you offer to help them? Or are you just looking out for yourself? They are your neighbors. Did you tell them your reasons for your decisions or are you secretly just sitting watching their lives go over the cliff so you can feel like you are smarter? Just remember money is not everything and most likely those same people will be the ones to visit you if you get sick or something. But you might not have thought of that.

I rented until Feb 07, then bought a home from a builder under an "incentive" program, knowing FULL WELL my new property could depreciate

===========

You sir are an idiot.

_____

Why, because I bought a house? Well, I suppose that does seem idiotic to those whom the trolls constantly vilify -- the "bitter renters".

I'm neither one of the REIC trolls nor a bitter renter.

Lots of you twits are priced out of homes. I feel bad for you. Tough luck. I happen to have a high household income from several income streams and I bought well within my means. Deal with it. I don't remember asking YOU if I should buy a house! Ha!

I don't know why some trolls here are bashing IT people. I'm not in IT but have friends that make over 100k per year by serving small businesses, as independent contractors. They set up networks, maintain them, install Voip, etc, and charge usually $1k / month as retainer per company. Figure, they only need to get 10 clients to make 100k / year. They are doing very well. Not hard at all to make 100k per year in IT if you work as an independent contractor. Oh, and one more thing for the newbies, HP did a job/wage inquiry a few months ago and the majority of the HP'ers weren't in IT. Many of us are engineers, lawyers, doctors, business owners, cops, gov workers, etc. The old timers here remember that. So case closed.

I do IT consulting and charge $75 to $90 an hour for my services. For the last 5 years I have worked 9 months a year. I've made $120-$150K a year. I could make an extra $50K if I wanted to but I prefer taking time off like I do.

Were I to do what I do as a 9-5 shmoe, I'd make $80K max. The nerd in a cube farm and the consultant/contractor are usually very different kinds of people.

How is wanting to be a real estate investor off of your friends "helping" them? Whatever. A real friend doesn't look at at people to see how they can make money off of them.

We tried to tell people our perspective about interest only mortgages and all we got was arguing. People wanted to believe what they wanted to believe. $10.50 an hour and they wanted to buy their 150K houses that they couldn't afford, when an 80K house in our area was perfectly fine.

Oh, and another thing. Those same people have behaved like absolute snobs. We saved our money, cut coupons, and shopped garage sales, while everyone else financed depreciating cars, furniture, and children's clothes at Gymboree.

Who is actually helping people now? Well, those of us who aren't drowning in debt.

The media wants to talk about all of these examples of people that were "tricked" into signing their mortgages. Well, we know plenty of people that knew exactly what they were doing and just got "house fever". They wanted to believe that house values rise forever. It's a gamble. We always said that and everyone laughed at us. It's sad to see so many of those people either losing their homes or realizing that they are stuck and cannot sell. They chose to gamble, they lost.

HP did a job/wage inquiry a few months ago and the majority of the HP'ers weren't in IT. Many of us are engineers, lawyers, doctors, business owners, cops, gov workers, etc. The old timers here remember that. So case closed.

============

Yea and NOBODY lied in that survey. Nope, everyone makes $300K a year on HP. Same people that complain gas is $3 and bitch about milk being $4 also make $300K a year as lawyers.

"HONG KONG (MarketWatch) -- Beijing's decision to allow individual mainland investors to trade directly in Hong Kong-listed shares could funnel billions into the market over the next year and sustain an ongoing bull run, according to analysts."

http://tinyurl.com/yr6egm

Just imagine all those newbie commie-bastard "investors" (GAMBLERS) flooding the Hong Kong exchange.They'll think it's just one big PAI GOW game and bet the whole chop stick!

Bloomberg today reports that hundreds of hedge funds and home-loan companies will be forced to sell debt backed by mortgages due to a freeze in the commercial paper market. Citing the Federal Reserve as source, Bloomberg writes that the $1.1 trillion market for commercial paper used to buy assets from mortgages to car loans has seized up just as more than half of that amount comes due in the next 90 days.

The article says that hedge funds may be forced sellers of some $75 billion of mortgage-backed debt, according to UBS figures. It says those sales would drive down prices and hurt the 38.4 million individual and institutional investors in money market funds, the biggest owners of commercial paper.

One firm mentioned in the article is Aladdin Capital, which oversees highly-rated Ottimo Funding. Aladdin’s chief investment officer George Marshman notes that investors are refusing to buy short-term debt backed by any mortgage that isn’t guaranteed by government-chartered companies such as Fannie Mae and Freddie Mac.

Law offices of Brodsky & Smith, LLC announces that a securities class action lawsuit has been filed on behalf of shareholders who purchased the common stock of Countrywide Financial Corporation ("Countrywide" or the "Company") (NYSE: CFC) from January 31, 2006 and August 9, 2007 (the "Class Period"). The class action lawsuit was filed in the United States District Court for the Central District of California.

The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of Countrywide.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased this stock during the above referenced class period you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice. If you want to discuss your legal rights, you may e-mail or call the law office of Brodsky & Smith, LLC who will, without obligation or cost to you, attempt to answer your questions. You may contact Evan J. Smith, Esquire or Marc L. Ackerman, Esquire at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by e-mail at clients@brodsky-smith.com, or by calling toll free 877-LEGAL-90.

The suit was filed in the U.S. District Court for the Central District of California on behalf of purchasers of Countrywide common stock during the period between Jan. 31, 2006 and Aug. 9, 2007, the firm said in a statement. (Reporting by Nichola Groom)

Law offices of Brodsky & Smith, LLC announces that a securities class action lawsuit has been filed on behalf of shareholders who purchased the common stock of Countrywide Financial Corporation ("Countrywide" or the "Company") (NYSE: CFC) from January 31, 2006 and August 9, 2007 (the "Class Period"). The class action lawsuit was filed in the United States District Court for the Central District of California.

WOW, no less than 6 class action lawsuits against CFC for securities fraud!

Orangelo's pumping and dumping finally caught up with him...

See left column of this article for a complete list.

http://tinyurl.com/2bnmxs

And Warren Buffett, who values managerial integrity above all else in the companies he buys, is getting ready to buy CFC???CFC, With no assets other than a rotting, sinking, declining REO. CFC, with 70% sub-prime dominated portfolio last year.Hey that's "value" investing for ya!HAHAHAHAHAHAHAH!!!!!

"130 IQ? Oh dear lord you are a deluded nerdling. Have you ever called IT support? If those douches have an IQ of 80 I'd be shocked."

IT support from India is horrible. I have never had a problem with IT support based in the U.S.

"As for you code monkeys out there,"

Oh... I am now a "code monkey". You have the mental maturity of a 13-year-old. It tells us a lot about how insecure you are. BTW - if you knew anything about the job, most progammers do not just write code' they are usually heavily involved in the design process, stuff that is way above your head.

"give me a break. Wow you write Java or .NET!! OOoooohh, Ahhhhh. "

No -- we write IN Java or IN .NET. You can find all the buzz words you want on an IT web site, but your use of the terms in the wrong context indicates you dod not know what you are talking about.

"Anyone can do it."

No, moron, not anyone can do it.

"That's why all your jobs are slowly but surely being sent to India and China and Romania where the same code can be written for 1/5 the cost."

That was 3 years ago, dumb shit! Many of those jobs have come back when no cost savings were realized because of the crap work of offshore programmers.

"I guess the upseide is you'll have a lot more time for your black helicopter/tinfoil hat clubs."

Maybe you can go back to blaming the Jews for all your misery in life.